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Fabricating authenticity key to hotel success

The National Bureau of Economic Research found that within 10 cities with the most substantial Airbnb presences, the home-sharing platform caused a 1.3 percent decrease in booked hotel nights and a 1.5 percent loss in overall hotel revenue. Photo credit: Airbnb

A cozy bed, continental breakfast and free Wi-Fi might have been enough for travelers a decade ago, but modern hotel guests have moved on to more creative offerings. Today, hotel patrons want their room keys to come paired with a dash of flair and their visit to gleam of authentic regional experience. Competition between hospitality providers has grown fierce; basic staples such quality service, comfortable lodgings and convenient locations aren’t by themselves enough to boost a hotel over its competitors.

For hoteliers, the very questions that drive the hospitality industry have become more pointed. Any hotel offers visitors a comfortable place to stay—why should they stay in a specific establishment?

The answer usually comes down to two words: experience and authenticity.

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This increased interest in approaching hotel stays as a way of living the “authentic” experience of traveling can be laid squarely at Airbnb’s corporate feet. While the hospitality industry continually shifts to adjust to changing guest preferences, the home-sharing behemoth thoroughly disrupted both hotelier norms and guest expectations when it burst onto the industry stage in 2008. The online platform may not have boasted luxury buildings or above-and-beyond service, but it managed to build an empire on the back of local authenticity and uniquity.

For Airbnb customers, finding an affordable apartment in the thriving heart of New York or a beachfront cottage in the midst of the summer holiday season is possible. The company encourages its users to adopt a “belong anywhere” philosophy by experiencing a new town or city as a local rather than a tourist or outsider. The lodgings themselves contribute to this be-at-home experience. Valued amenities such as kitchens are commonplace and often come in at a lower price than similarly outfitted hotel rooms would require.

Travelers quickly took to Airbnb’s offerings, turning the company from a promising new app into a full-on disruptive force. The online platform encompasses almost 5 million lodging options in 81,000 cities worldwide and, during its most recent funding round in March of 2017, was valued at approximately $31 billion. Analysts at the data insight company Trefis estimate that Airbnb is likely worth around $38 billion today.

Airbnb’s runaway bout of success posed a challenge to traditional hotel providers because it wholly disrupted consumer expectations for what the guest experience entails. As Bill Carroll, a professor at Cornell University’s School of Hotel Administration, commented for an article in The Street: “If hotels want to prevent customers from choosing Airbnb over them, they either have to prove greater value—which for many who dislike the idea of staying in a stranger's apartment is enough—or they'll have to lower prices.”

Interestingly, the online platform already appears to have had some effect on hotel prices; one recent report from the National Bureau of Economic Research found that within 10 cities with the most substantial Airbnb presences, the home-sharing platform caused a 1.3 percent decrease in booked hotel nights and a 1.5 percent loss in overall hotel revenue.

The main change, however, is in value. If the NBER’s research shows anything, it would be that while Airbnb does draw some travelers away from traditional hotel options, the home-sharing platform isn’t likely to run hospitality chains into the ground. People still want to stay in hotels; however, post-Airbnb guests will need more out of the experience than the cozy room and pool access their predecessors might have been comfortable with.

To remain competitive in an increasingly value-centered market, hotel executives and property developers need to rethink hotel design at every level. This is no easy task because every reconsideration for the way a hotel might incorporate local flair and accommodate guest cravings for authentic experiences must be both scalable and consistent with the overall brand. That said, it is possible to do so given some strategy.

Appeal to Influential Demographics

Previous generations might have saved their vacation time for one family-centered trip a year, but, for millennials, one foray doesn’t leave nearly enough opportunity for exploration. According to a recent report from the Nielsen Company, the vast majority of surveyed millennials plan to take two or more long-haul trips every year, and a third plan to make four. These numbers far outstrip those reported by baby boomers, many of whom are retired and would ostensibly have the time, money and inclination to travel. Regardless, researchers for the project estimated that millennials today account for up to 50 percent of the global retail travel market.

Hotels that cater to millennial tastes and interests have the chance to capitalize on their growing presence in the travel market. This attention can take a variety of forms given that millennials tend to gravitate toward quirky, lifestyle-based accommodations and appreciate thoughtful experiences. Thailand’s Dusit International, for example, has already moved to engage with millennial travelers by offering community spaces for travelers to mingle, sustainably sourced cuisine from local chefs and guides to local attractions.

Engage Airbnb Outliers

Some travelers will never be Airbnb converts. Business professionals traveling for work, for example, might not have as much care for whether their hotel has strong ties with the local community. However, they will value the consistency and value inherent in a traditional hotel. Business consumers want to accrue the brand points chains offer; they want the ease of after-hours check-in services, shared Wi-Fi and access to the shared gym. By focusing more on increasing the value for this subset of patrons, traditional hotels can cement their place as the go-to hospitality option for traveling professionals and gain an edge over their competitors.

Build a Foundation in the Home-sharing Market

Unlike hobbyist online hosts and weekend renters, hospitality executives have years of experience and know exactly how to optimize a traveler’s residential experience. Hotels don’t need to remain bound within traditional boundaries to be successful; they can and should expand into the home-sharing market.

The extension would be a natural one for well-known brands. Hotel executives already have the connections and resources they would need to establish a presence in the home-sharing market, as well as a valuable grasp on the quirks and culture of the local area. Consumers, for their part, would value the increased consistency, security and reassurance that a brand-name organization brings to their stay. A company-backed home-sharing experience provides the best of both worlds: guests can both enjoy the flexibility and authenticity of the home-sharing experience without compromising on the security and benefits of using a brand-name hotel.

Guests want and need more than a roof over their heads; they need their trips to be memorable in a way that surpasses tourism of the past. One point is for sure: The disruption caused by Airbnb’s entry onto the industry stage has made sure that the watchwords of the next decade in hospitality services will be value, uniquity and authenticity. Creating the foundation for that experience will fall to those of us in hospitality and development and will require every ounce of our creativity, strategy and business savvy.